The Agenda

How to think about Development

 

Charles Kenny proposes a simple thesis: The world today is witnessing divergence in incomes, and convergence in outcomes. His book, Getting Better: Why Global Development is Succeeding–and How we can Improve the World Even More, is a clear and accessible introduction to the development question, with a thoroughly-evidenced thesis and a slightly misleading title.

The title is slightly misleading because Kenny in fact highlights the ways in which global development clearly is not succeeding. Classic theories of economic development, like Solow’s, predict that poor countries’ per-capita income should converge with wealthier countries’ over time. A very rough sketch of the theory is that (1) economic output and hence income is a product of labor, capital, and technology; so (2) countries with low per-capita incomes (the cheapest labor) can yield the highest returns on marginal investments of capital of the latest technology; which (3) will attract new investments of capital and technology into the poorest countries, until all countries are on a level, per-capita-income wise.  (The key assumptions here are that technology moves frictionlessly over borders and that all labor is equally productive in the same capital and technology environment.) 

But this just has not happened. As Kenny writes, “GDP per capita in sub-Saharan Africa rose from $477 to only $561 between 1960 and 1999. In the same period, high-income countries increased their incomes from $13,000 to an average of $31,000.” That’s precisely the opposite of what the Solow growth model predicts. So one of the key assumptions must be wrong. 

Today’s economists point to “production technology” — something which isn’t strictly technology and isn’t classified as a component of labor either — as the culprit. It’s sort of in between — the non-physical, perhaps ineffable, social knowledge and mores that enable and motivate people within certain cultures to be productive modern capitalists. 

The good news is that in most measures of quality of life — health, life expectancy, education, respect for individual rights, etc. — the world has seen tremendous convergence. Despite my cynical disposition, I see no escape from Kenny’s data on this point. Today’s Zimbabwean may not have much more income than a mid-19th century Brit, but he does have a longer life expectancy, much better medicine, cellphone access to check in on distant agricultural markets and loved ones, etc., and even a better chance of a basic education. Kenny details all of this extensively. (The same is true of inequality within countries. The very rich and the middle class in America today are more disparate in income than they were in 1800, but the middle class has a dietary variety, life-expectancy, mobility, and internet access not very different from Bill Gates’, and much better than yesteryear’s rich.)

The easiest way to explain and articulate this is that physical technology is simple to bring across borders, but social technologies are more difficult. It’s relatively easy to install mosquito nets, offer condoms, inject vaccines, and purify water in any location — the history of those technologies or where they were developed is irrelevant to their function. But transplanting the whole system of sub-conscious mores, unspoken rules, rhetorics, habits, and inherited knowledge that underpin a functional society’s economy (and which may just have been serendipitous accidents of Western history) is proving to be much more difficult. 

I am admittedly inexpert on this topic, not close to qualified to evaluate or even articulate Kenny’s thesis. But this idea resonated with me as an embodiment of some of the deepest insights of the conservative intellectual tradition (Kenny might not put it that way). Both Michael Oakeshotte and Friedrich Hayek thought that technocratic plans for the rational improvement of the world would be thwarted because societies are in fact regulated by inarticulate, inherited, rules that are embedded historical, local practices. The written law could only channel and embody them, not replace or remake them. Modern development economics’ bafflement by “production technology” seems in some way a confirmation of that idea. In the end, I think the book reaffirms that the scientific and technological innovations of our very brightest, not rational planning, are the key to progress. 

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